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TheStreet Open House

'Unaccountable Bureaucracy' Wins High Marks From Public

WASHINGTON, D.C. (TheStreet) -- Next time you're on a rant about official Washington's indifference to the interests of everyday citizens, take heart that some politicians are serious about going after the bad guys.

The House Committee on Financial Services took its investigation of "an unaccountable new government bureaucracy" straight to the people on Jan. 27, devoting a new section of its Web site to gathering dirt on a bogeyman that's menacing borrowers and homebuyers.

"Tell us your story," the committee asks once you click on the bright red banner "Protecting Consumers" on the home page. "How has the CFPB affected you, your business, or your customers?"

That's "CFPB" as in "Consumer Financial Protection Bureau," the two-year-old agency that was authorized in the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. The agency has broken new ground reining in sleazy debt collectors, slipshod mortgage servicers and banks that never seem to have a customer service rep in the house when a customer is calling to complain about bogus fees.

In other words, the committee that operates under Texas Republican Jeb Hensarling is on a mission to protect you from an agency that's actually protecting you.

It is by no means a complete list, but critics say the agency is inadequately supervised, that a proposed revamp of its headquarters is pricier than New York's Trump World Tower, and that it is on a par with the National Security Agency because it collects volumes of consumer data that it uses to analyze consumer trends and problems.

"I don't know of anyone but the worst parts of the lending industry and Republicans in the House who see the agency through this lens," said Jim Lardner, spokesman for Americans for Financial Reform, a coalition of consumer, labor and civil rights groups.

A gaggle of chest-beating Republicans has been in attack mode against the CFPB since before it even opened its doors, trashing the agency's architect, Massachusetts senator Elizabeth Warren, and passing bills to try to weaken its authority. The latest effort, up for a vote in the House of Representatives in coming weeks: the Consumer Financial Protection and Soundness Improvement Act of 2013, which would reduce the agency's pay schedule and make it easier to overturn its rules, among other curtailments. 

Once the agency was in operation in summer of 2011, its foes went into overdrive. Hensarling even refused to allow CFPB director Richard Cordray to appear before the committee to discuss the agency's semi-annual report: President Barack Obama's recess appointment of Cordray was unconstitutional, Hensarling said in a letter to Cordray last April, so the testimony would have to wait until "an individual validly holds this position."

Against all odds, Cordray managed by July to get the Senate vote he needed to pass muster with Hensarling, but it made him no less scorned.

A favorite practice of Hensarling's is to introduce Cordray at official hearings with taunts about the agency being "accountable to no one," which is always kind of funny since the CFPB chief is sitting across from his cantankerous questioners precisely because he is being held accountable. Hensarling managed to squeeze references to Cordray as "credit czar" and "national nanny" and "benevolent financial product dictator" in a single sentence at a hearing in September.

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